At M P Accountants Northamptonshire we often get asked by individuals who have recently become self employed ‘what records do I need to keep?’
As a bare minimum you must keep a record of
- All you sales and takings
- All your purchases and expenses
We do recommend however that additional records are kept to assist with the smooth running of the business. It also helps to ensure that any accounts drawn up are accurate and provides documentation in the event of a HMRC investigation.
All businesses are different and therefore the type of records needed will vary. Examples of additional records include:
- Cash Book and bank statements – particularly helpful in identifying any income or expenditure which may have been missed in the basic records
- Sales and purchase ledgers – these identify who owes the business money and who the business owes money to
- Wages records
- Hire purchase and leasing details
- Details of private funds brought into or withdrawn from the business
If you work in the construction industry under the Construction Industry Scheme and are paid net of deductions of tax you must retain your payment statements and where higher rate tax deductions are made, your verification number.
Records of the purchase and sale of assets that you use in the business such as computers, desks and vans should be kept separately from the day to day running costs and expenses as these are dealt with differently in the tax return. Generally rather than reclaiming the whole cost at the time you buy the asset the cost is reclaimed over time through capital allowances. Some assets can be reclaimed in full if they meet the criteria for the annual investment allowance.
It is important to keep business and personal records separate so you can work out exactly what relates to the business.
You must normally keep your business records for five more years after the filing deadline of 31 January (or if you have submitted your tax return very late – 15 months after the date you sent your tax return if this is later than the five year rule)
At M P Accountants Kettering, Corby, Northampton and Market Harborough are conveniently located near to our premises in Lamport although we have clients from all over the UK. We are a firm of Chartered Certified Accountants ensuring you receive a professional and competent service at all times.
If you need any advice regarding becoming self employed or any other accounting or taxation matters please don’t hesitate to contact us.